I prefer to look at things with cold head. Here's the facts.
There is one insolvent bank (Laiki) and one, which solvency is in doubt (Bank of Cyprus). Other banks are OK, unless Laiki and Bank of Cyprus fail catastrophically (like Lehman Brothers).
Government of Cyprus already spent some money trying to save Laiki in 2012, with significant help from Russia (Russians keep a lot of money on Cyprus, private citizens and companies alike).
This time, Laiki required a lot more money. Initial plan was very strange: government wanted to skim all depositor in all banks. This caused demonstrations on the streets and rejection in Parliament. I don't know how such plan could be proposed at all. There are two possibilities I can think of: conflict of interest (corruption?) or attempt to pressure Russia into another bailout. As I said, Russians keep a lot of money on Cyprus, there is also Russian Commercial Bank (Cyprus), which is a subsidiary of big Russian bank, VTB, connected to Russian government.
Anyway, idea to rob all depositors failed. Crisis was resolved properly: small depositors (under 100000 Euros) are not losing anything, bigger depositors at Laiki and Bank of Cyprus are losing. More at Laiki, less at Bank of Cyprus. Those who say "expropriation" forget that the same scheme used in US, when bank fails. That's not expropriation, that's bankruptcy.
Now, the consequences. Offshore banking on Cyprus is over. Same thing happened in Iceland and Ireland. Most depositors will take money (whenever possible) and run. New ones will not come. Economy of Cyprus is going to be in trouble, because offshore banking was a very significant part of it. A pity, I liked the island after spending vacation there in 1994. Some Russian businesses and people are going to lose money. Reminder: there is no such place as absolutely safe bank. And that's about it. Total losses are around 12 billion Euro. That's a huge money for Cyprus, but a statistical error for EU economy. We saw today that there is order in Cyprus, on streets and near banks, no riots, no huge lines.
What will not happen. There will be no cascade failures of EU banks. At least, not related to Laiki or Bank of Cyprus. EU will not fail into recession, it's already there. Even offshore banks in other places will not suffer. Not until there is some other failure in another offshore zone. Russian money will not return to Russia, it will go to Bahamas, Hong Kong, Jersey or whatever offshore banking haven you can think of. Main thing, for me, this crisis will not affect EU economy in any significant way.
EU banks failed hard on Cyprus events. Among them my investment, Banco Santander (SAN). Today I added to this position. I will probably add more if fall continues.